Seniors living on fixed incomes have a hard time keeping up with expenses, as their daily costs rise faster than their pension payments.
For the period between October and December 2022, retirees over the age of 65 with an annual income of less than $129,757 can receive up to $685.50 per month through the Old Age Security (OAS) program.
People over 60 who contributed to the Canada Pension Plan (CPP) before turning 70 can receive up to $1,253.59, but the average monthly payment is closer to $725, according to the government.
The OAS is adjusted for inflation approximately every three months, while the CPP is adjusted every January.
For some people, that is not enough.
Viola Golden, 74, has lived off OAS and CPP payments since retiring from years of retail work at age 67.
Golden carefully plans his finances with his 76-year-old brother, with whom he lives in an apartment.
His expenses are rising faster than increases in his pension, and “$25 more a month isn’t going to do anything for anyone,” he said.
Golden is worried about a possible rent increase next year, because any unplanned spending could throw her budget out of balance.
“I don’t want to go on welfare and I don’t want to live in a neighborhood where I don’t feel safe. I feel safe where I am.”
He avoids dipping into his modest savings, because that money is reserved for his funeral and he wants to leave some money to his grandchildren.
Food cost goes up
People are feeling the pinch of the 10.3% year-over-year increase in food prices recorded by Statistics Canada in the 12-month period leading up to September.
Food prices have risen faster than the general consumer price index, which reached a year-on-year inflation rate of 6.9% in September, according to Statistics Canada.
Buying cheaper bread and cooking more beans were common strategies seniors said they used to keep their food bills manageable. Buying generic brand foods or relying on bulk foods for freezing were also common practices.
Golden thinks twice about buying a roast for Sunday dinner these days, because paying the nearly $30 price “feels like you’re being ripped off.”
Transit costs are also a concern
Brenda Thompson, 76, also said the pension increases aren’t keeping up with the higher costs she sees every day. She lives in her daughter’s house along with her 22-year-old grandson who has autism.
Although Thompson’s daughter has a good job, with everything getting more expensive, she wishes she could contribute more to household expenses.
“My daughter is the only one who works at home. I help her where I can, but with two small pensions a month, I can’t help her that much.”
Thompson was “closeted” after her husband died 19 years ago, but her daughter pushed her to make friends at the Good Companions Senior Center about six years ago. Thompson is volunteering at the center today.
The recent increase in the cost of a monthly senior transit pass, from $46.75 to $47.75, was top of mind for Thompson because public transportation is his only independent mode of transportation.
The bus pass is a non-negotiable expense for Thompson, and he worries that the increased cost will keep others from getting out. Without a pass, a senior can be stuck at home every day except for the two days a week when seniors ride free, she said.
When inflation slows, pensions pay
Bob Baldwin, a former policy director for the Canadian Labor Congress, said the pension payments will reach the cost of living, since they are indexed for inflation.
In October, OAS payments increased 2.8 percent more than the monthly payments received by pensioners during the months of July, August and September. CPP payments through 2022 were up 2.4% from last year, based on inflation calculated between October 2020 and October 2021.
In July, the government also announced that retirees receive a 10 percent increase in their monthly income when they turn 75.
When an increase in a pension payment lags real-time inflation, it means that the value of a pension will also temporarily be higher than the cost of living when inflation eventually slows, according to Baldwin.
“In the beginning, when inflation is rising, that delay provides less than complete protection in the following January. When inflation declines, it provides more than complete protection,” Baldwin said.
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